Do you think property prices in your area have fallen more than 5%? You’re probably right

Real estate prices are either down slightly or just above water level recently, depending on which metric you look at.

The Nationwide Building Society Index for August mixed that picture up a bit today, revealing the largest annual fall in house prices ever of 5.3 percent. There will be many who feel this still underestimates what is happening.

While the headlines of long-term home price indices provide a way to gauge the temperature of the housing market, they rarely reflect the actual change in property values ​​in your area.

Many may feel that home prices in their area have fallen significantly more than the declines in major reports indicate.

That is certainly the case near me, in the Hertfordshire metropolitan area, where if you could take the same property and put it on the market both last summer and now, I think today’s seller would have to accept at least 10 per cent less.

Nationwide announced today that house prices have fallen 5.3% over the past year – with the average house down almost £15,000 from its August 2022 peak

Rising mortgage rates have drastically reduced what most buyers can afford and the housing market has gone from Bazball to Geoffrey Boycott.

Properties no longer hit the market with aggressive hit-and-hope pricing, but Rightmove’s recent listings instead feature a defensive wave of discounted properties — some face multiple cuts.

This is of course a theoretical situation and is therefore not supported by the kind of data that stands up to scrutiny.

In fact, it’s a claim based solely on my own anecdotal evidence, which I’ve compiled in my armchair as a committed real estate geek (more on that below).

I regularly keep an eye on the prices of properties for sale and, more importantly, what happens next.

In theory, this means that the house price indices compiled by Nationwide, Halifax, the ONS/Land Registry and Rightmove are more likely to be correct.

They each rely on their own sources for numbers, but their data sources are extensive and they have experienced statisticians calculating the numbers.

The ONS/Land Registry home price report is likely to be the most accurate (up 1.7% pa in June) as it uses national statisticians and actual sales prices to compile the index.

Nationwide’s home price index (down 5.3 percent annually in August) and Halifax home price index (down 2.4 percent annually in July) use their own mortgage deal data, but because they’ve long been two of the largest mortgage lenders in the country, Use Your Own Mortgage Underwriting Data There’s plenty of it.

Rightmove home prices (down 0.1 percent annually in August) are an outlier because they use asking prices of newly listed homes, but they provide a useful barometer of seller and buyer sentiment — and there’s that at fast every house goes on the open market on its platform.

And yet many of us regularly look at these reports and think, “Well, that’s not what’s happening around me.”

One of the key elements behind this is that the headlines are based on the idea of ​​the average house – and that’s a property that doesn’t actually exist.

As for size, I’m sure at some point you’ll be able to figure out what an average house is, maybe a three bedroom semi-detached with 1,300 square feet of living space and a 40 foot yard.

But even if you were to pick two of these in the same city, there are so many other variables that could make Lot A and Lot B have very different values: location, condition, proximity to a school or train station.

The Halifax report details how much house prices have fallen each year in each region. However, many would argue that values ​​in the surrounding area have fallen even more

But it’s not just the average house that’s the problem, each of the reports has its own shortcomings: the ONS/Land Registry lags behind the others and often feels outdated; Halifax and Nationwide rely solely on their own mortgage lending; Rightmove does not include price cuts.

Now, everyone but Rightmove has the same problem: they only produce numbers based on actual homes sold — and therefore don’t account for all the homes that come on the market and don’t find a buyer.

For this reason, I’ve always argued that if you want to know how much you could be buying or selling at any given moment, you need to combine viewing these important reports with your own anecdote.

Most importantly, this means keeping an eye on what’s selling and what’s not, and whether or not asking prices are lowered to get a sold application.

The key things to watch out for are whether homes are coming to market for more or less than past comparable properties, whether they quickly go under or under-sell, and then potentially need to be repeatedly priced down – and by how much.

I wrote about this a year ago with tips on creating your own anecdotal home price index, saying that to gauge the temperature of the housing market, you have to look at what’s not selling as well as what.

That’ll help you move more than anything Nationwide is reporting on home prices this morning — and unless you’re planning to move, it doesn’t really matter how much your house is theoretically worth now.